After weeks if not months of conversations in an attempt to see off the annual bonus row, Barclays' board has realised that Diamond is the right man to lead them through the next few months of compensation hell.

For it is in the first few months of the year that the City's largest banks – including Barclays – will divvy up the compensation pot, and bankers across London will be handed multi-million pound bonuses in spite of the fact that 2010 has not been a record year.

As this paper revealed last week, although conversations surrounding Project Merlin continue, the notion that there may be some form of pact between Government and the industry is over.

As it stands, the majority of the major British banks are making noises that they are more than aware that they must move into the next phase, from attempted denouement to full-on fight.

Vince Cable, the Business Secretary, is likely to kick-start this months-long battle somewhat early when he appears on BBC1's The Andrew Marr Show this morning, preaching about the perils of excessive compensation and a lack of lending to small businesses.

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In Barclays case, with John "The Vicar" Varley firmly ensconced in the departure lounge, and Bob "The Bruiser" Diamond soon to be in the hot seat, it means the bank can have a no-holes barred public debate about compensation.

Diamond is no stranger to arguments about excessive compensation, having steered Barclays Capital to becoming the pre-eminent investment bank, and earning the best part of £100m along the way. But the arguments that Diamond will put across will be crucial. Contributions to the Her Majesty's coffers is a key one, as are employment and inward investment. These must be explained with both bravado and brains, so that the argument moves on.

With Varley and Project Merlin, Barclays was looking to conjure up a near impossible solution that would never have come to pass. In Diamond, it has a Bobtimistic bruiser, who is unlikely to stop fighting until he has won.